More US Department Stores Likely to Declare Bankruptcy

: Reese Baker & Associates

  Filed under: News

There’s no doubt that retail stores in the United States took a financial beating this year. In all, there were 21, high profile retailers that filed for Chapter 11 bankruptcy protection, including very big brands such as Toys R Us, Vitamin World, Hhgreegg, The Limited, and Gander Mountain. Some have even called the string of department store Chapter 11 bankruptcies filed in 2017 the “retail apocalypse”. Now, According to a recently published S&P Global Market Intelligence report, a number of apparel retail and department stores could be following this pattern in the New Year.

2017 Retail Bankruptcies

There were many companies that were unable to adapt to the ever-changing landscape of consumerism in America that lead to Chapter 11 bankruptcy in 2017. Growing pressure from e-commerce companies and discount retailers are cited as the primary causes of the financial woes of these companies. Collectively, these stores have closed down over 5,000 stores in order to liquidate underperforming stores in an effort to fix the company’s balance sheets. Here is a list of the major 2017 retail bankruptcies:

 

  • Charming Charlie
  • Styles for Less
  • Toys R Us
  • Aerosoles
  • Vitamin World
  • Perfumania
  • Gymboree
  • Alfred Angelo Bridal
  • True Religion
  • Rue21
  • Payless
  • RadioShack
  • Gander Mountain
  • Gordmans
  • Hhgregg
  • BCBG
  • Wet Seal
  • The Limited
  • Eastern Outfitters
  • Vanity
  • Cornerstone Apparel

 

It’s important to note, that even though these companies filed for bankruptcy, it doesn’t necessarily mean they will disappear. Chapter 11 bankruptcy allows companies to stay in business while they restructure their debt and negotiate with creditors to make alternative plans on paying their debts.

2018 Possible Retail Bankruptcies

2017 saw more US retail bankruptcies since the recession. This year has indeed been a bloodbath for big box retailers, but according to the S&P Global Market Intelligence report that was published the second week of December 2017, it might not yet be over. The report outlines fifteen, publically traded, U.S. Department stores and apparel retail companies that are at high risk of defaulting on their debt next year. It gives the probability of default as a percentage based on estimated credit models. The companies include:

 

  • Sun Pacific
  • Sears & Kmart
  • Razer Inc.
  • Vince Holding
  • Bon-Ton
  • Bebe
  • Motherhood Maternity
  • Destination Maternity
  • Stein Mart
  • Christopher & Banks
  • Dallas Gold & Silver
  • Charleston Gold & Diamond
  • Burlington Coat Factory
  • Men’s Warehouse
  • A. Bank
  • Black Diamond

 

 

While only time and the holiday shopping season will tell if these stores do end up having to file for Chapter 11 bankruptcy, it may be a good idea to use caution when buying gift cards from these establishments. Chapter 11 bankruptcy protection will allow these stores to stay open, however, filing for bankruptcy protection inevitably leads to stores closings that could hamper your Christmas gift card spending.